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Table of Contents: I. Introduction. – II. Regulating innovation in the digitalised age. – II.1. Impact of regulation on innovation. – II.2. Crypto-assets as innovation: a moving target. – III. The regulation of crypto-assets in the EU. – III.1. The MiCA framework, its objectives and challenges. – III.2. Activity- and risk-based approach to regulating crypto-assets. – IV. Future-proofing the EU regulation of crypto-assets. – IV.1. The challenge of future-proofing a regulatory intervention in innovative markets. – IV.2. Activity-based regulation of crypto-assets: future-proofing the regulatory perimeter. – IV.3. Risk-based approach to regulating markets in crypto-assets. - V. Conclusion.
Abstract: The 2023 EU regulation of markets in crypto-assets (MiCA) is a timely and ambitious response to the regulatory challenges of a fast-developing and technology-intensive field. The new regulation expands the regulatory perimeter, thus enabling EU-wide supervision of crypto-asset service providers and issuers of the so-called “stablecoins”. As such, the MiCA is in line with the key objectives of the 2020 EU Digital Finance Strategy: it updates the existing EU regulatory framework to facilitate digital innovation while protecting European consumers. “Same activity, same risk, same rule” approach is at the core of the MiCA regime. The new regulatory intervention, however, is to be put to test by the incessant technological and business model innovation within the crypto industry. Is this new regulation future-proof? This paper identifies and explores the two main points of vulnerability that often undermine the future-proof nature and, ultimately, the effectiveness of regulatory interventions in innovative sectors. First, it analyses the structures that define the scope of the new framework, and their capacity to adjust to and incorporate innovation falling outside of the regulatory perimeter. Second, the paper explores the mechanisms that ensure the regulatory and supervisory framework under the MiCA remains relevant and able to address the changes in the amplitude and sources of risks. Against this background, the paper discusses two features indispensable for a future-proof regulation: the openness of the regulatory perimeter, and the regulatory capacity for risk anticipation.
Keywords: activity-based regulation – crypto-assets – innovation – MiCA – regulatory perimeter – risk-based regulation.
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European Papers, Vol. 8, 2023, No 2, pp. 665-687
ISSN 2499-8249 - doi: 10.15166/2499-8249/681
* Associate professor, Utrecht University, Department of International and European Law, n.divissenko@uu.nl.
